Best Practices for Amortization in NetSuite 

Executive Summary 

This document outlines comprehensive best practices for implementing and managing amortization schedules in NetSuite, with particular focus on migrating in-progress amortization schedules from legacy systems. It covers effective template configuration, item-level amortization settings, and NetSuite's robust reporting capabilities, reinforced by a case study demonstrating successful implementation. 

This document presents a practical three-step approach for migrating mid-life amortization schedules: 

  1. Creating appropriate amortization templates in NetSuite 

  2. Importing transactions with original date ranges and amortization parameters 

  3. Using mass updates to mark prior periods as recognized up to the last amortization date 

The case study illustrates how these practices solve the complex problem of migrating partially amortized expenses while preserving historical data and financial reporting integrity. Implementation enables organizations to maintain historical amortization data, ensure accurate expense recognition, support regulatory compliance, and reduce manual reconciliation efforts, ultimately providing a smooth transition to NetSuite's financial platform. 

Benefits of Implementation 

  • Maintains historical amortization data for comprehensive reporting 

  • Ensures accurate expense recognition in future periods 

  • Provides a smooth transition from legacy systems 

  • Supports regulatory compliance through accurate financial reporting 

  • Reduces manual reconciliation efforts 

Key Findings 

  1. Effective Template Configuration: Properly configured amortization templates (both Standard and Variable types) are crucial for accurate expense recognition. Templates should be mapped to appropriate GL accounts and correctly linked to expense and deferral accounts. 

  2. Item-Level Amortization: NetSuite allows amortization schedules to be assigned directly to items, enabling automatic schedule generation when items are billed or credited, with flexibility to modify templates at the transaction line level. 

  3. Mid-Life Amortization Challenge: A significant challenge during system migrations is handling in-progress amortization schedules. Common issues include incorrect date adjustments, time-consuming transaction modifications, and prolonged reconciliation periods. 

  4. Comprehensive Migration Solution: This document presents a three-step approach for migrating in-progress amortization schedules: 

    1. Creating appropriate amortization templates in NetSuite 

    2. Importing transactions with original date ranges and amortization parameters 

    3. Using mass updates to mark prior periods as recognized up to the last amortization date from the legacy system 

  5. Reporting Capabilities: NetSuite offers robust tools for amortization tracking, including saved searches, SuiteAnalytics datasets, and reconciliation capabilities that support both historical reporting and future forecasting. 

Recommendations 

  • Conduct comparative amortization reporting between legacy systems and NetSuite before processing the first post-migration amortization 

  • Verify alignment between NetSuite amortization templates and legacy system calculations 

  • Assign appropriate permissions to users requiring access to amortization reports 

  • Implement regular reconciliation practices to maintain data integrity 

  • Periodically review and update amortization templates to reflect changing business needs and regulatory requirements 

 

Introduction: NetSuite Amortization Best Practices 

Overview 

Effective amortization management is a critical component of financial accuracy and compliance for organizations utilizing NetSuite. As businesses increasingly shift toward subscription-based models and manage complex prepaid expenses, the need for robust amortization processes has become paramount. This document presents comprehensive guidance on configuring and utilizing NetSuite's amortization capabilities to maximize financial visibility while minimizing manual effort. 

Purpose 

This guide serves multiple purposes: 

  1. To outline industry best practices for amortization schedule configuration in NetSuite 

  2. To provide practical solutions for common amortization challenges, particularly during system migrations 

  3. To establish a framework for ongoing amortization management that supports both accounting accuracy and efficiency 

  4. To demonstrate how NetSuite's native functionality can be leveraged to handle complex amortization scenarios 

Scope 

The best practices highlighted in this document address the complete amortization lifecycle within NetSuite, from initial template setup through transaction processing to reporting and maintenance. Special attention is given to the complex scenario of migrating in-progress amortization schedules from legacy systems—a common challenge that often creates significant reconciliation issues when not properly addressed. 

Target Audience 

This document is designed for: 

  • Financial leaders overseeing system implementations or optimizations 

  • NetSuite administrators responsible for financial module configuration 

  • Accounting professionals managing deferred expenses and revenue recognition 

Business Impact 

Implementing these best practices enables organizations to: 

  • Reduce manual reconciliation efforts between subledgers and general ledger accounts 

  • Improve forecast accuracy for future expense recognition 

  • Maintain audit trails for historical amortization activities 

  • Ensure compliance with accounting standards and internal policies 

  • Streamline period-end close processes related to prepaid expense management 

The following sections detail specific configuration approaches, procedural recommendations, and a case study illustrating the successful migration of in-progress amortization schedules—demonstrating how organizations can maintain financial continuity while transitioning to NetSuite's robust financial platform. 

 

Detailed Best Practice Recommendations 

Here are best practices in using and configuring amortization schedules in NetSuite effectively to ensure accuracy, compliance, and efficiency: 

Set Up Amortization Templates 

  • Define Standard Templates: Create amortization templates for commonly used schedules (e.g., straight-line, accelerated). You may use either Standard or Variable types of templates to clearly define the methods and complexities of calculation of periodic amortization.  

  • Use Correct Periods: Ensure the number of periods in the template matches your accounting needs. 

  • Link to Revenue or Expense Accounts: Properly map templates to the relevant general ledger accounts. A deferred expense account must be specified for amortization to be supported. Deferral accounts can be specified as well in item records, and expense account records. 

  • Associate Amortization Templates with Expenses: You can select amortization templates for expense lines on vendor bill and vendor credit transactions. 

Proper Item Configuration 

  • Set Up Amortization Rules for Items: Assign amortization schedules directly to items. The item defaults to use the assigned template to generate an amortization schedule when it is billed or credited. You can change the amortization template on individual transaction lines. 

Updating Amortization Schedules 

  • Set Amortization Preferences: The preference Allow Users to Modify Amortization Schedules allows users to change schedules after they are created. 

  • Viewing Amortization Schedules: View list of Amortization Schedules in Lists > Accounting > Amortization Schedules. You can also view an amortization schedule from the purchase transaction that created it.  

  • Mass Updating Amortization Schedules: You can update the Is Recognized field on many amortization schedules at one time using a mass update.  

Leverage Reporting and Reconciliation Tools 

  • Saved Searches and Reports: Build saved searches for tracking amortization balances and schedules. 

  • Creating an Amortization Schedule Dataset in SuiteAnalytics: In a dataset, you combine the fields of a root record type and any joined related record types to create a query. You can link the Amortization Schedule dataset to another dataset, such as the Revenue Recognition Schedule dataset. 

  • Reconciliation: Regularly reconcile amortization entries with GL balances to catch discrepancies early. 

  • Forecasting: Use NetSuite reporting to forecast amortization impacts on future periods. 

  1. Regular Maintenance 

  • Review Schedules Periodically: Check and update templates for changes in business processes or regulations. 

  • Archive Old Schedules: Deactivate obsolete templates or schedules to maintain system cleanliness. 

 

Case Study: Create In Progress (Mid Life) Amortization Schedules 

Executive Summary 

This case study addresses one of the most common questions and instances in NetSuite implementations moving from another ERP system where there are Amortization schedules that are in progress and not completed upon migration. 

Introduction 

This is a deep dive into the process of creating in progress Amortization schedules from the creation of transactions to record prepaid expenses to marking schedules of prior periods that have already been recognized as expense. 

Problem Statement 

When migrating expense transactions where Amortization Schedules are in progress, an added step would be to recalculate remaining periods and amount for future periods amortization. This disregards prior periods that have already been amortized so historical amortization will not be available for reporting. 

Below are common issues when migrating transactions with Mid-Life Amortization Schedules: 

  1. Incorrect adjustment of amount and Start dates and End Dates that lead to incorrect Amortization values. 

  2. Time consuming adjustment of transactions prior to migration. 

  3. Longer reconciliation from prior system to NetSuite Amortization reports. 

Case Background / Context 

  1. Upon Migration of Open transactions for NetSuite Implementations, In Progress Amortization schedules need to be considered. Most practices include adjusting Start Date and End date, Transaction amount and Transaction lines to create schedules for future periods only. 

Analysis 

  1. Importing the open transactions to NetSuite needs to have their real Amortization Start Date and End Date for proper Amortization Reporting. 

Solution / Strategy 

The solution is to ensure proper recording of Transactions with In progress Amortization with the correct Date Ranges. 

I. Create Amortization Templates in NetSuite 

II. Import All Transactions with In-Progress Amortization Schedules 

  1. Import Transactions with the same Start Date and End Date in the originating transactions 

  2. Ensure that there is a fixed Last Amortization Date. 

  3. Import transactions with Amortization Templates created in NetSuite. 

  4. Upon creation of transactions, system will create Amortization schedules accordingly 

III. Mass update Amortization Schedules 

  1. Go to Lists > Mass Update > Mass Updates 

  2. Click Amortization Schedules

  3. Click Update Is Recognized Flag

  4. Complete the mass update form to set criteria, including selecting  

    • Yes or No in the Is Recognized field. 

    • Set Amortization Period to the Last Amortization Date from the old ERP system. 

  5. Click Preview or Save. 

Results / Outcomes 

Steps above should be able to: 

  1. Create Amortization Schedules from the correct Start Date of the transaction as specified in the originating transaction. 

  2. Ensures that recognized Amortization in prior periods will not be included in Future amortizations. 

  3. Users will be able to run Amortization Reports for prior periods. 

Conclusion 

This solution gives users a smooth transition from the old system to NetSuite where they can easily run Amortization Schedules and run reports from amortizations of prior periods for transactions imported in NetSuite. 

Recommendations 

  1. Run Amortization reports in old system to compare with Amortization reports in NetSuite after migration but before first Amortization processing. 

  2. Ensure that the Amortization Templates configured in NetSuite are the same as the amortization calculations in the old system. 

  3. Provide necessary Amortization reports permissions to necessary users. 

Need help with Amortization in NetSuite, or have questions? Schedule a call today! Or email us at info@lightbridgesolutions.com.

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